Aton: poised to benefit from expanding mobile OTP market




The author is an analyst at NH Investment & Securities. He can be contacted at jack.baek@nhqv.com. — Ed.

Aton should continue to perform well both in licensing of the fintech security solutions arm and in mobile OTPs, its two main focal points. Even seasonality aside, the company posted a strong OP in 1Q22, and further earnings growth is expected in 2Q22 thanks to the addition of customers in the mobile OTP business.

OP 2022E: annual OP exceeding 10 billion W for the first time since its creation

Aton is poised to deliver both healthy earnings growth and solid profitability, with sales and OP estimated at W49.4 billion (+14.2% YoY) and 10.7 billion W (+16.6% YoY), respectively. These growth expectations are driven by healthy licensing activity in the fintech security solutions arm and a strong mobile OTP business, for which the sales share is expected to reach 40% by 2022. expected to outpace the increase in sales in the future.

The company should also benefit from one of the new government’s objectives, namely the introduction of a mobile one-time password (OTP) for all banks. Aton quickly secures the largest market share for private mobile OTP, which is rapidly replacing physical OTP due to its low issuance cost. It should be noted that a rapid growth is also observed for the frequency of use of mobile OTP. As the company’s pricing structure depends on the number of uses, the profit contribution of the mobile OTP business is on the rise.


In PASS certificates, Aton’s other main growth area, the number of issues now exceeds 36 million, which is the highest among domestic private certificates. Although the share of public sector applications is high, we expect PASS to gradually start contributing to overall profitability as the company takes charge of charging for the service.

Offers an attractive valuation after the share price adjustment at the start of the year

Aton shares are currently trading at a 2022E P/E of 15.5x, the most attractive valuation level among its peers in the fintech and security sectors. The company is gaining traction in high-margin market segments such as mobile OTP and fintech security solution licensing. Anticipating that its earnings will increase in the future alongside the continued growth of the fintech industry, we believe that Aton deserves special attention from investors.

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